Camille Sikorski was divorced in 2016. She currently provides a home for her 15-year-old daughter, Kaly. Kaly lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of $52,500 and contributed $4,100 of it to a qualified retirement account (a for AGI deduction). She also received $5,500 of alimony from her former husband.   Finally, Camille paid $2,600 of expenditures that qualified as itemized deductions.

i.               What is Camille’s Gross Income?

ii.              What is Camille’s Adjusted Gross Income?

iii.            Should Camille take itemized deductions or the standard deduction? How much?

iv.             Does Kay qualify as Camille’s dependent? Explain why.

v.              What is Camille’s filing status?

vi.            What is Camille’s allowable deduction from AGI?

vii.           What is Camille’s income tax liability before applying any applicable tax credits?

2.              Assume the original facts but now suppose Camille’s daughter, Kaly, is 25 years old and a full-time student. Kaly’s gross income for the year was $5,200. Kaly provided $3,120 of her own support, and Camille provided $5,200 of support.

i.               Does Kaly qualify as Camille’s dependent? Explain your answer.

ii.              What is Camille’s filing status?

iii.            What is Camille’s allowable deduction from AGI?

iv.             What is Camille’s Income tax liability before applying any applicable tax credits?

The Green Thumb Gardener is a retail store that sells plants, soil, and decorative pots. On December 31, 2016, the firm's general ledger contained the accounts and balances that appear below. ACCOUNTS AND BALANCES Cash $ 5,700 Dr. Accounts Receivable 2,600 Dr. Allowance for Doubtful Accounts 52 Cr. Merchandise Inventory 11,300 Dr. Supplies 1,200 Dr. Prepaid Advertising 960 Dr. Store Equipment 8,100 Dr. Accumulated Depreciation—Store Equipment 1,500 Cr. Office Equipment 1,600 Dr. Accumulated Depreciation—Office Equipment 280 Cr. Accounts Payable 2,625 Cr. Social Security Tax Payable 430 Cr. Medicare Tax Payable 98 Cr. Federal Unemployment Tax Payable State Unemployment Tax Payable Salaries Payable Beth Argo, Capital 25,457 Cr. Beth Argo, Drawing 20,000 Dr. Sales 90,048 Cr. Sales Returns and Allowances 1,100 Dr. Purchases 46,400 Dr. Purchases Returns and Allowances 430 Cr. Rent Expense 6,000 Dr. Telephone Expense 590 Dr. Salaries Expense 14,100 Dr. Payroll Taxes Expense 1,270 Dr. Income Summary Supplies Expense Advertising Expense Depreciation Expense—Store Equipment Depreciation Expense—Office Equipment Uncollectible Accounts Expense ADJUSTMENTS a.–b. Merchandise inventory on December 31, 2016, is $12,321. c. During 2016, the firm had net credit sales of $35,000; the firm estimates that 0.6 percent of these sales will result in uncollectible accounts. d. On December 31, 2016, an inventory of the supplies showed that items costing $275 were on hand. e. On October 1, 2016, the firm signed a six-month advertising contract for $960 with a local newspaper and paid the full amount in advance. f. On January 2, 2015, the firm purchased store equipment for $8,100. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $600. g. On January 2, 2015, the firm purchased office equipment for $1,600. At that time, the equipment was estimated to have a useful life of five years and a salvage value of $200. h. On December 31, 2016, the firm owed salaries of $1,830 that will not be paid until 2017. i. On December 31, 2016, the firm owed the employer’s social security tax (assume 6.2 percent) and Medicare tax (assume 1.45 percent) on the entire $1,830 of accrued wages. j. On December 31, 2016, the firm owed federal unemployment tax (assume 0.6 percent) and state unemployment tax (assume 5.4 percent) on the entire $1,830 of accrued wages. 3. Complete the worksheet. (Round your intermediate calculations and final answers to 2 decimal places.)

P. 4-2 For each of the following indicate the amount of revenue that Beanville should recognize in its 2017 (1) government-wide statements and (2) governmental fund statements. Provide a brief justification or explanation for your responses. The state in which Beanville is located collects sales taxes for its cities and other local governments. The state permits small merchants to remit sales taxes quarterly. The state sales tax rate is 6 percent. In December 2016, city merchants collected $50 million in sales taxes that they remitted to the state on January 15, 2017. The state, in turn, transferred the taxes to the city on February 15, 2017. In December 2016, the federal government awarded Beanville a reimbursement grant of $500,000 to train law-enforcement agents. The city had applied for the grant in January of that year. The city may incur allowable costs any time after receiving notification of the award. In 2017, the city incurred $400,000 in allowable costs and was reimbursed for $350,000. It was reimbursed for the $50,000 balance in February 2018. In January and February 2018, it incurred the remaining $100,000 in allowable costs and was reimbursed for them in April 2018. In December 2016 the city levied property taxes of $1 billion for the calendar year 2017. The taxes are due June 30, 2017. The city collected these taxes as follows: December 2016 $ 56 million January 1, 2016, to December 31, 2016 $ 858 million January 1, 2017, through March 31, 2017 ($18 million per month) $ 54 million Total $ 968 million It estimates the balance of $32 million would be uncollectible. In addition, in the period from January 1 through February 28, 2017, the city collected $16 million in taxes that were delinquent as of December 31, 2016. In the period March 1 through June 30 2017, the city collected $8 million of taxes that were also delinquent as of December 31, 2016. In December 2017 Beanville sold a city-owned warehouse to a private developer. Sales price was $4.2 million. The warehouse had cost $4 million when it was acquired 10 years earlier. It had an estimated useful life of 40 years (with no salvage value). In December 2017, Beanville's city-owned radio station held its annual fund drive. A local business offered to match all pledges made on December 2, 2017, up to $50,000, assuming that the amount pledged was actually collected. Based on past experience the city estimates that 90 percent of the pledges will actually be collected. By year-end 2017, the city had collected $25,000 of the pledges, and in January and February it collected an additional $15,000. It received $25,000 of the matching funds on February 15, 2018. Respond with respect only to the $50,000 in matching funds.

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $62 on December 31, 2016.

Required:

Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $62 on December 31, 2016.

Required:

Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

14. Rate earned on stockholders' equity fill in the blank %

15. Rate earned on common stockholders' equity fill in the blank %1

6. Earnings per share on common stock fill in the blank

17. Price-earnings ratio fill in the blank

Back on December 23, 2000, Jasmine Crusher purchased a home in Pahoa, Hawaii for $1,500,000 which included the land and the home. Her property tax bill for 2001 showed assessed value of the land of $300,000 and of the building for $1,200,000. She used the home as her personal residence until October 15, 2010 when her employer transferred her to San Francisco. Jasmine put the house on the market for a sale price of $1,900,000 but was receiving no offers. In February 2011, she found out that a house down the road had just sold for $1,250,000. So, she decided to rent it and use it for occasional vacations for herself. Jasmine hired a management company to find the renters. Since the house is in Hawaii, the management firm never had a problem having the house rented for most of the year. Because Jasmine used a 15 year loan, the loan was completely paid off in December 2015. Jasmine turned over all bill paying responsibilities to the management company starting in 2014. Below are the details Jasmine received from the management company for 2014 and 2015. However, in 2016, she decided that the management company was charging her too much for the small amount of work they seemed to be doing, so she fired them on June 1 and took over all of the work of renting the house and paying the bills. On December 2, 2016, the nearby volcano erupted and Jasmine’s house was burned to the ground by one of the advancing lava flows, while she was working in San Francisco. As a result of having been so busy with work and the rental, Jasmine neglected to pay her homeowners insurance that was due July 1, 2016, so at the time of the eruption, she had no insurance. The 2016 information is a combination of the management company information through May 31, and Jasmine’s records for the rest of the year up until the house was caught in the lava flow. Jasmine sold the land in a fire sale “as-is” for $50,000 on December 31, 2016. Jasmine is a successful IT consultant with AGI, made up of wages and interest income, for 2016 of $375,500 and $365,750 for 2015.

1. Data from the financial statements of Dils Brothers Co. and J. Cox, Inc. are presented below (in millions):

To the nearest hundredth, what is the 2016 debt-to-total assets ratio for Dils Brothers Co.?

Select one:

A. 44.16

B. 3.78

C. 0.26

D. 0.71

2.

An economic event that requires accounting recognition defines:

Select one:

A. The cost principle

B. An asset

C. An accounting transaction

D. An income statement

3.

Which of the following statements is true regarding generally accepted accounting principles (GAAP)?

Select one:

A. U.S. GAAP is the same as GAAP in other countries.

B. GAAP is subject to change as conditions warrant.

C. Under GAAP, if two companies engage in the same transactions, they must choose the same accounting methods.

D. GAAP is a set of laws.

4.

Wonderland Company purchased equipment with a cost of $190,000, with an estimated residual value of $10,000, and an estimated life of 15 years. After 5 full years of recording depreciation by the straight-line method, it was determined that due to obsolescence, the equipment’s useful life should be reduced by 5 years and the residual value changed to zero.  

The depreciation expense for Year 6 is:

Select one:

A. $22,000

B. $26,000

C. $11,000

D. $20,000

5.

Data on the physical inventory for Ace Company as of December 31, 2016 are given below:

Assuming Ace Company applies the LCM method on the inventory by major category of items, the inventory balance reported on the Balance Sheet as of December 31, 2016 will be:

Select one:

A. $132,000

B. $133,600

C. $133,200

D. $132,400

6.

M. Fields, Inc. wishes to accumulate $1,200,000 to be used to pay off a balloon note at the end of 4 years.  

How much will M. Fields invest today to accumulate the desired amount if the investment earns an annual rate of 12% compounded quarterly? (Select the closest amount.)

Select one:

A. $747,804

B. $130,496

C. $508,416

D. $704,000

7.

Blue Moon Company purchased a machine on January 1, 2016 for $120,000, with a 5-year life, and a $12,000 residual life.  

Compute the book value of the machine on December 31, 2018 if the company uses the double-declining balance method of depreciation.

Select one:

A. $25,920

B. $21,600

C. $48,000

D. $20,000

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $71 on December 31, 2016.

Required:

Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

Forecast Sales Volume and Sales Budget

Raphael Frame Company prepared the following sales budget for 2016:

At the end of December 2016, the following unit sales data were reported for the year:

For the year ending December 31, 2017, unit sales are expected to follow the patterns established during the year ending December 31, 2016. The unit selling price for the 8" × 10" frame is expected to increase to $17 and the unit selling price for the 12" × 16" frame is expected to increase to $32, effective January 1, 2017.

Required:

• Compute the increase or decrease of actual unit sales for the year ended December 31, 2016, over budget.
• Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2017, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2017.
• Prepare a sales budget for the year ending December 31, 2017.

• 1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2016, over budget.

  Enter any decreases beginning with a minus (-) sign.

  		Unit Sales, Year Ended 2016				Increase (Decrease) Actual Over Budget
  		Budget		Actual Sales		Difference	Percent
  8" × 10" Frame:
  	East						%
  	Central						%
  	West						%
  12" × 16" Frame:
  	East						%
  	Central						%
  	West						%

  2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 2017, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2017.

  Enter any decreases beginning with a minus (-) sign. Round budgeted units to the nearest whole unit.

  		2016 Actual Units		Percentage Increase (Decrease)	2017 Budgeted Units (rounded)
  8" × 10" Frame:
  	East			%
  	Central			%
  	West			%
  12" × 16" Frame:
  	East			%
  	Central			%
  	West			%

  .  Prepare a sales budget for the year ending December 31, 2017.

  Raphael Frame Company
  Sales Budget
  For the Year Ending December 31, 2017
  Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
  8" × 10" Frame:
  East		$	$
  Central
  West
  Total			$
  12" × 16" Frame:
  East		$	$
  Central
  West
  Total			$
  Total revenue from sales			$

The accountant for Becker Company wants to develop a balance sheet as of December 31, 2016. A review of the asset records has revealed the following information:

Required:

The accountant for Becker Company wants to develop a balance sheet as of December 31, 2016. A review of the asset records has revealed the following information:

Required: